John Betts, president and chief executive officer of McDonald’s Canada, was general manager for McDonald’s in the Michigan region when a couple of competitors announced they would be moving into the area in a big way.

Betts, 61, doesn’t say Tim Hortons was one of them. But Tim Hortons was one of them.

Betts took his restaurant operators up to Canada to have a look around and paid attention to the fact that coffee shops were sprouting up on every street corner. And they tasted the coffee.

And went back to Michigan to improve their coffee.

It was a small innovation, but one that would change the flagging fortunes of the fast-food franchise that was built on burgers and fries.

“That was ten years ago. The Michigan region became the model for the turnaround in the U.S. business coffee store,” says Betts.

When McDonalds introduced the premium roast across all 13,700 restaurants in the U.S. in 2006, it had already been selling for some time in Michigan locations.

In 2007, Consumer Reports declared McDonald’s coffee the winner of a taste test against Starbucks, Burger King and Dunkin’ Donuts.

As vice-president, national beverage strategy, Betts led the U.S. business toward a new and better beverage menu, including the McCafé concept.

When he was named president, McDonald’s Restaurants of Canada in 2008, Betts faced a challenging landscape.

“We were at an all-time low in terms of market share, our breakfast business was doing poorly, we weren’t relevant,” says Betts.

“We needed to do something to entice Canadians to come in and break a habit from one of the several other brands that were here. The only way to do that was to do something dramatic.”

When it debuted its premium coffee in the U.S., Mcdonald’s had given away coffee on a small scale to generate interest. The McDonald’s Canada premium roast coffee was developed specifically for Canadian palates and Betts decided to go big with a free national giveaway in April, 2009.

The company has run two events per year since then, tripling its brewed coffee business, including McCafé specialty beverages, over 2008. (Free coffee is not included in the figure).

“We’ve created a bond with Canadians that we didn’t have five or six years ago and it all started with the coffee,” says Betts.

“The coffee was the beginning. It allowed us to expand our menu, to reinvest in our restaurants to make them more contemporary, to make sure that the menu was more contemporary and evolved.”

Bold innovations, including breakthrough products and services are the new engines of growth for companies, according to Robert G. Cooper, a former McGill University professor, professor emeritus at McMaster University and one of the world’s leading innovation management scholars.

Cooper is the author of Winning at New Products, a textbook now in its 4th edition.

“Markets in many industrialized countries and industries are mature and increasingly commoditized; gains in market shares are expensive; and acquisitions often don’t work,” according to Cooper.

He points to how a small café launched in rural Vermont in 1981 became the force behind the K-Cup and Keurig system and how P&G rejuvenated Oil of Olay by reformulating the product using new technology to create $2-billion in sales annually.

“The trouble is that the great majority of ideas are mediocre at best. Envisioning that game-changing, bold idea with real potential is very rare indeed,” according to Cooper.

For Umbra director of design Matt Carr, inspiration struck on a flight to Hong Kong.

The Toronto based design firm is notable for its roster of useful, whimsical and affordable design products. The head office is organized around fostering inspiration and collaboration.

“We were focusing on closet organization. There was an opportunity because everything was so damn boring, completely square, no attitude, no colour,” says Carr.

“It’s a thing in your closet, so why can’t it look like an article of clothing,” he asked himself.

At first he sketched t-shirts and different dresses. He played around with the pocket design. Then he hit upon the idea of turning the flirtatious little black dress into jewelry storage you can hang in your closet.

It looks like a little black dress, but it has clear pockets where rings and earrings and bracelets can be stored and Velcro flaps to hold necklaces. It doesn’t consume horizontal space – which is at a premium in the small places people live in today – it consumes vertical space.

Marketing it as the Little Black Dress was something that resonated with consumers and the product has been a smash hit.

Women buy them in bulk, one for themselves, one for their sister, one for a birthday.

Lots of imitators are ripping off the idea. The firm has chased off six knock-offs so far.

“It’s kind of a compliment,” says Carr.

That’s also the reason they put it out at a competitive price – it forces competitors to knock it off at a low price too, making it a less attractive, less lucrative target.

It retails for about $20.

More than one million have been sold since the product went to market in August 2010, and it’s now available in a half-dozen more varieties.

Steve Jobs, who led Apple to its greatest successes before his death in 2011, was an innovation emperor, Cooper points out.

But that’s not the only way to generate great ideas. Businesses need to make sure employees feel that they can contribute their ideas and be rewarded. The drive to innovate must be driven from the top down. Internal systems are needed to weed the bad ideas from the great and to drive the great ideas to market.

“It takes an estimated 60 ideas to generate one blockbuster new product,” according to Cooper.

The modern pace of innovation has sped up, with consumers expecting dramatic innovations every six months or every year, from companies like Apple, Google and even McDonald’s, says Sheldon Laube, a Silicon Valley entrepreneur who has co-founded four startups.

His current project, Artkick, allows people to display some of the 60,000 images from 2,000 museums on their internet-connected television screens when they’re not in use, transforming black screens to fine art, for no charge.

Instead of waiting for someone to get a bright idea, more companies are studying innovation and how it happens, Laube says. They’re putting systems in place to ensure it happens and that good ideas make it to market.

Laube should know. He was the first chief innovation officer of PricewaterhouseCoopers, a firm more typically associated with the dry business of accounting.

Laube points out that McDonald’s hasn’t only innovated when it comes to products like a better coffee, it has also changed the look of the restaurants by adding the McCafé concept and has innovated when it comes to packaging.

Not all innovations are easily copied. McDonald’s is able to provide a degree of consistency across restaurants in different countries that is difficult to replicate, Laube says. But the bottom line is that rapid product innovation is essential to any company.

“You have to keep providing more variety to your customers. That’s true whether you are in high tech or flipping hamburgers,” says Laube.

More on thestar.com

We value respectful and thoughtful discussion. Readers are encouraged to flag comments that fail to meet the standards outlined in our
Community Code of Conduct.
For further information, including our legal guidelines, please see our full website
Terms and Conditions.